Repairs as Negotiation Tactic

1 Reply

Does anyone have any experience waiting to do necessary repairs to a home to utilize as a negation tactic?

 For example:   I recently sold a single family home.  I was aware that the roof needed replacement, and in preparation to put it on the market, I replaced the roof.  After receiving an offer, the buyers tequested to have numerous smaller issues taken care of after the inspection.  In hindsight, if I didn't replace the roof beforehand, I believe that would have been the only item that they would have requested fixing (because it is such s big ticket item).  

     I am asking because I am about to sell another property that needs a new septic system.  Should I wait to replace it?  Or get it over with and go ahead and do it?  Thanks!

@Kelly Williams

Assuming that you are going to sell on the retail market, I have had success in thinking in terms of what a retail-buyer, non-investor-type is going to ask for or be "looking for." 

I put "looking for" in quotes because the majority of retail buyers would likely be immediately turned off by a ratty roof and then you may not have gotten such a quick response.  As you probably know well, retail buyers want a turn-key property that looks and smells great.  

A septic system, I would probably categorize in the "I don't see it so I assume it works" category.  If the inspection report comes back and makes a direct mention that it needs to be done, then you can make an allowance for that.  Chances are that the buyer won't even use the money for it but in the end, that really won't be your concern anymore.  

In order to mitigate some of these items that the retail buyer CANNOT see but can be issues nevertheless, I would always highly encourage paying for a year's worth of Home Owner's Warranty.  They are relatively inexpensive and cover the MAJOR SYSTEMS in a house such as HVAC, Foundation, Plumbing, Structural and Roof.  Shop around and you can find something for as little as several hundred dollars.  There are also different levels of coverage you can get.  I would personally keep it simple and just cover the major systems.  It really does go a long way to giving the retail buyer, peace of mind that they won't be out of pocket several thousand for a septic system that did not contribute to their, "OH I LOVE THIS PLACE!" initial reaction.  THAT (the OH I LOVE THIS PLACE), is where we as investors are able to make the most money and therefore, where I personally think we should spend smartly... it has to appeal to the senses.  

On your roof, I think you did the right thing.  A new roof looks SO great and contributes tremendously to curb appeal.  Had you not replaced it, you may not have gotten the offer you did or the price you were looking for.  I always try to think, "END-BUYER."